Georgia and her husband Seb live in a French village along with their darling baby daughter. All is wonderful, except that they’re not quite sure what to do next!
Case Studies are financial and life dilemmas that a reader of Frugalwoods sends to me requesting that Frugalwoods nation weigh in. Then, Frugalwoods nation (that’s you!), reads through their situation and provides advice, encouragement, insight, and feedback in the comments section. For an example, check out last month’s case study.
I provide updates from our Case Study subjects at the bottom of each Case Study several months after a Case is featured. You all requested an easier way to track Case Study updates and I have heard your pleas :)! Here’s list of all the Case Studies that currently have an update provided at the end of the post (and a hint that if you’re a past Case Study participant who hasn’t sent me your update yet, send it on over–your fans want to hear from you!):
- Reader Case Study: Earn More, Spend Less, Or Both? (Julie’s story, published October 2016)
- Reader Case Study: Stay Home With Baby or Return To Work? (Kelly’s story, published November 2016)
- Reader Case Study: The Case Of The Over-gifting In-Laws! (Grace’s story, published December 2016)
- Reader Case Study: Renovations and Vacations (Audrey’s story, published January 2017)
- Reader Case Study: Help Me Decide How To Pay Off $185K In Student Loans (Bridget’s story, published February 2017)
- Reader Case Study: The Grad School Dilemma (Emily’s story, published March 2017)
- Reader Case Study: Can We Buy Our Dream Home? (Jack & Elizabeth’s story, published April 2017)
- Reader Case Study: We Have A Van, Now We Need A Plan! (Florence & Anna’s story, published May 2017)
- Reader Case Study: To Buy Or Not To Buy In Sydney, Australia? (Jemma & Greg’s story, published June 2017)
- Reader Case Study: Starting From Scratch In Canada; Where Do I Go From Here? (Alison’s story, published July 2017)
- Reader Case Study: Moving To Europe From South Africa, Trying To Make Ends Meet (Clara’s story, published August 2017)
- Reader Case Study: Should We Stay (In San Francisco) Or Should We Go Now? (Melanie & Kurt’s story, published September 2017)
- Reader Case Study: Having A Quarter-Life Crisis in Nashville, TN! (Steph & Zach’s story, published October 2017)
- Reader Case Study: National Park Rangers Figuring Out Finances (The Ranger’s story, published November 2017)
- Reader Case Study: Londoners Wonder About Buying A Property (Betty & David’s story, published December 2017)
- Reader Case Study: At Age 57, It’s Not Over Yet! (Lucy’s story, published January 2018)
- Reader Case Study: From Brooklyn to LA With a Baby (the FrugalBrooklyn’s story, published February 2018)
- Reader Case Study: Debt And Dreams In Queensland, Australia (Sam & Keith’s story, published March 2018)
- Reader Case Study: Single Psychologist Saving In NYC (Lauren’s story, published April 2018)
- Reader Case Study: How A Cancer Diagnosis Changes Everything (Emily & John’s story, published May 2018)
- Reader Case Study: Inside A Financial Circus (No, Really, The Finances Of An Actual Circus!) (Jana & Dextre’s story, published June 2018). WITH UPDATE PHOTOS TOO!!!!
- Reader Case Study: Should We Buy A Campground And Laundromat? (Payton & Riley’s story, published July 2018)
- Reader Case Study: Social Workers Who Need To Get Solvent (Sue & Dan’s story, published August 2018)
- Reader Case Study: Should I Become A Veterinarian? (Sally & Harry’s story, published September 2018)
- Reader Case Study: With Twins On The Way, Should We Quit And Move? (Rose & David’s story, published October 2018)
I probably don’t need to say the following because you all are the kindest, most polite commenters on the internet, but, please note that Frugalwoods is a judgement-free zone where we endeavor to help one another, not to condemn.
And a disclaimer that I am not a trained financial professional and I encourage people not to make serious financial decisions based solely on what one person on the internet advises. I encourage everyone to do their own research to determine the best course of action for their finances.
With that I’ll let Georgia, this month’s Case Study subject, take it from here!
I’m Georgia, I’m 33 (my husband Seb is 31) and I’m a longtime reader and big fan of the Frugalwoods! I’ve been following Frugalwoods since before they made the big move and have really enjoyed all of the Reader Case Studies. Recently, I’ve been flip-flopping on some decisions of my own.
After reading a Case Study one afternoon, I decided to write one up myself as though I were doing it for the blog. It was SO HELPFUL. I mean, the detailed budget alone helped me and my husband see our finances so much more clearly. It took me the better part of a week, but I’m so glad I did it! Writing it all up helped clarify some stuff but I’d still love input from Mrs. Frugalwoods and Frugalwoods nation!
We begin in Paris, France
My husband Seb and I met in the summer of 2010 when I was apartment hunting in Paris. He is from Cannes, France and I’m from Florida, USA. I had just been accepted to Le Cordon Bleu (a culinary school in Paris), there was a huge heat wave, and it was all rather exciting. I was 23 and a hot mess.
Seb had just met his future girlfriend (of several years), and we wound up hanging out a lot together in a bar in the 13th arrondissement called la Belette Qui Tete (something about a ferret?) where we drank cheap flavoured beer and talked about Camus and our romantic entanglements (mostly our romantic entanglements).
Seb and I became good friends, and when he later moved to the US to be with his American girlfriend (and I moved to Australia to be with this random Australian man I’d met), we kept in touch and wrote each other emails as well as actual letters on real paper (in which we talked about Camus and our romantic entanglements).
Fast forward to 2013 and I’m making artisanal ice cream in Oakland, California, and Seb is living in Versailles, France while not working on his PhD. I emailed him out of the blue, because life is less than thrilling when you’re making ice cream all day long (tasty, but underwhelming) and I’m all “HEY I need to come back to Europe, do you have any ideas?” And he’s all “YEAH come back and sleep on my couch and we’ll find somebody to marry you!”
Seb and Georgia Tie The Knot
Approximately four months later, Seb and I got married. His mother literally had to lie down when we told her, poor thing, and kept insisting that it was all a joke (awkward). At the time, Seb was about €9,000 in debt for student loans, mostly due to a semester abroad in the US. When I tried to be added to his bank account, I discovered that I’d been blacklisted from all French banks because of an overdraft.
When I’d left France the first time (swearing never to return), I’d forgotten to close my automatically-debited movie pass which, after three years of negligence and overdraft fees, came to €2,000 (!!!). This is an apt illustration of my previous handle on all things financial… .
By the time we celebrated our first wedding anniversary, we’d paid off all of our debt, Seb was finishing up his PhD, and we’d stashed away a few thousand euros in our savings account. We’re both naturally frugal, because we both know what it’s like to be stone cold broke. After living in the Paris area for awhile, we decided we’d like to move to the countryside because when we visited his dad (who lives in said countryside), I fell in love with his little town before we’d even gotten off the train. It was a risky decision and everyone told us how difficult it is to get jobs in the middle of nowhere, but I’ve always figured there’s work for people who are willing to work. We moved, we both got jobs, and everything worked out splendidly!
Living In A French Village
Now that we’re installed in our postcard-perfect French village in Normandy, and have been happily puttering along for a few years, I am of course brainstorming ways to move someplace else. Or, more precisely, ways to be able to live in multiple places at once that do not involve tricks in the space-time continuum. In short, I want to have more control over my time and have the ability to see my US-based family more often.
This deep, emotional desire has been heightened by the birth of our most delightful baby, alias Little Pie, who just turned five months old. We’re not planning on having any more children, so she is our one and only, and is very loved! Multinational relationships are great, but they do involve a lot of tugs at the old heartstrings. I want my parents to be able to hang out with their (only) grandkid and vice-versa, and I want Seb’s dad to be able to hang out with his (only) grandkid. Basically, I want to have my cake and eat it.
Seb and Georgia’s House
We bought our home in 2018 for $147,300 (€130,000). We paid all of the notary fees in cash (about $10,200 / €9,000). We didn’t pay any agency fees as we knew the owner. We did pay a courturier fee (not sure what this is in English) of about $1,700 / €1,500. The courturier negotiated our bank loan since in France it is very difficult/impossible to get a loan for a good rate if you do not have a permanent contract with your work, which neither my husband nor I have. Our total loan from the bank was $151,845 /€134,027 at a 1.6% interest rate. We paid $11,330 /€10,000 as a downpayment. We still owe $144,814 /€127,821 on the house.
We’ve done about $11,330 / €10,000 in construction on the house, with a friend who charged us a very friendly rate, which we paid in cash. This was all cosmetic work, as the house had no fundamental issues when we bought it. We’ve also done work ourselves, and spent about $2,250 / €2,000 to install a deck and a pergola, paint the interior, put up drywall, etc.
I’m not sure how much the house is currently valued at, but the previous owner’s agency provided a quote of $150K – $180K /€130K-160K, which obviously we have to take with a grain of salt. However, I love obsessively watching the real estate market and am pretty up to date on local housing activity. Given that, I would price the house at around $160K – $170K /€140K – €150K in the current market based on comparable properties, although our house is a little exceptional and therefore difficult to price. Our home is newer (in that it was not built in the 1600’s) and is located downtown, surrounded by older/scenic properties.
We have a large yard, three bedrooms, and there’s no work necessary—this type of property is really hard to find in our town, which dates to 1100 AD! We’ve done lots of improvements (more or less transformed and updated the interior and exterior) and this should add to the value of the house. Further improvements will probably not add to the value, since comparable (built circa 1960’s) properties don’t currently sell for much more than $180K /€160K, no matter how much bigger or nicer they are. In light of that, we’re not planning on spending any more money on home improvements.
If we were to move, I think we’d lean towards renting out this home. I estimate we could probably rent it out for about €700-800 per month. This is the rental price of comparable properties (3 bedroom non-attached houses in town with a garden and new appliances). If we were to move, our plan is to slightly lower our monthly mortgage payments (they’re currently €700) to €600 and try to rent out the house for €800, saving the extra €200 for the property’s eventual needed repairs/emergencies.
HOWEVER there is quite a spanner in the works, better known as Our Jobs. Seb and I are both pretty good at saving money*, but we certainly don’t make much (me especially!!). Luckily we live in France, where life is less expensive, and we do not have cars or animals, although we narrowly avoided buying chickens to eat our compost and sheep to mow our lawn. Seb has only ever lived in apartments and when confronted with expanses of green to maintain, he tends to have sudden strokes of genius…
Anyhow, Seb is a high school teacher and also puts in extra hours for extra school-related work (he teaches French to teenage immigrants who’ve recently arrived, usually under traumatic circumstances). Seb loves his job, but he has to reapply for it every year which, because he is French and used to job contracts that last a lifetime, makes him highly nervous.
Seb’s professional background is in immigration. He did his PhD on the subject and has worked for the government with people seeking asylum (not for very long, but long enough to realize it wasn’t the job for him!). I’m glad he’s not doing it anymore, because having to refuse people papers because their atrocious suffering is not quite as atrocious as that guy over there is a soul-sucking activity. Since it’s expected that workers will refuse a certain percentage of asylum candidates… it’s a tough job.
Seb also taught at the university level in the US and enjoyed that very much. He really likes teaching and working with teenage/college-age people. If we moved to the States, he’d probably pursue teaching at a high school or community college, although I know he’d be up for something different too. He also runs his own independent publishing house, teaches philosophy, and we both volunteer at a local charity bookshop. Given his varied talents, I’m sure something cultural or what have you would work for him.
*Okay spoiler alert: after completing a detailed budget (thank you, Mrs. FW, for motivating me to do this!! Very, very eye-opening) I am sad to say that perhaps we are not quite as frugal as we thought… whoops!
I work part-time as a pedagogical assistant at a culinary high school, where I teach kids professional English, such as “I recommend the Chablis,” and help them taste-test Blue Lagoon cocktails at ten in the morning. I love my job, but I’m in year three of a six-year contract that cannot be renewed. I could leave this position at any time prior to the termination of my contract, but for me to give up the advantages of this job, I’d have to be paid a lot more. I walk to work (no car), work part-time, have zero work-related stress, have SIXTEEN WEEKS OF PAID VACATION to spend with my baby and my man, and to travel to the US… and I really enjoy my work! The downside? I don’t make very much money.
I’ve considered taking the national exams to become a chef instructor at the high school level, which is basically my current job with more responsibility. However, this would probably mean moving to another town (there aren’t all that many culinary high schools, even in France!). And once you’ve passed these exams, the government can send you pretty much anywhere in the country that needs a teacher. This position does not pay super super well (about 1,600 Euros per month starting) and the main clincher is that I need to become a French citizen first… and thus pass their charming national exam. So, this idea’s on the back burner. I do not hold an EU passport, but I will be applying for French citizenship this year, once we get all the documents together. In the meantime, I can legally work in all EU countries (other than maybe the UK, because of Brexit) as I have a French work visa, which is a ten-year visa and is renewable.
I’ve also considered getting a United Nations job. I was shortlisted for a UN editing gig in Geneva a few years back, and would consider doing something similar. They offer quite a good deal whereby you work in Geneva and live in France—we have friends who live in Evian and do this. The pay for the UN jobs is quite peachy, and the competition is fierce, but I’d be willing to move to do something interesting and well-paid that would allow me work with words and feel like I’m helping people.
I tallied up the jobs I’ve had over the years and the total came to over fifty. I used to work several jobs at a time, and have had A LOT of short-term contracts. My main areas of focus are/were:
- Museums: I was Manager of Art Education at a fine arts museum in Tallahassee for about six years. I was also a culinary tour guide in Paris when I lived there.
- Restaurants: I’ve worked mostly as a pastry chef, but also as a cook and server and have had several stints as a caterer for weddings and parties.
- Education: In total, I’ve been an instructor (whether culinary or English language or otherwise) for over a decade.
- Miscellaneous: I’ve done secretarial work, worked in universities on the administrative side, been a treatment writer for commercials, written material for a travel website (and took photos!), worked as an editor for films and books, worked in hotels as a bilingual receptionist, worked for an event decoration company for eight years, and also had a very rewarding job working for a women’s charity while I was in college in Florida.
Georgia’s PhD and Writing Aspirations
Currently, I’m getting my PhD in English Studies at Bordeaux University. I’m in my first year and it’s a three-year program. The big idea is that after graduation I’ll try to get a job teaching at the university level in the US, where we will go to make big money (or at least more than $40K a year). Then, after a handful of years, we return to retire early in France. This idea is not set in stone, nor is it concretely actionable, which makes both of us wonder if it’s really the best scenario.
In addition to both being teachers, Seb and I have a real affinity for school: I have a Master’s degree in English from Bordeaux University and a Diplôme de Cuisine from Le Cordon Bleu Paris. Seb has a PhD in sociology and political science from the University of Versailles.
What I’d really like to have is lots of time to hang out with my kid and my husband, be able to afford both time- and money-wise to visit my family often, and be able to write. The undercurrent of all these life choices is my desire to be a published writer with a solid–though not necessarily opulent–career. Thus far, I’ve put in a little over a decade and countless completed manuscripts trying to achieve this dream and have yet to see any offers of representation or publication, although I have been published as a translator. Of poetry. Which sells like positive hot cakes, let me tell you.
Should We Move To Florida?
Another dilemma for me: do I try to make more money now? Do I start a side hustle and really try to increase my paltry income in order to attain early retirement? Do I change jobs, which would probably involve less time spent with my man and my kid and also my family, in pursuit of making that end goal a reality? Or do I keep on keeping on with the PhD and the knowledge that somebody somewhere will probably hire me for more money than I could make doing professional calligraphy or blogging or cat-herding or whatever I could do as a side hustle right now?
There’s also the cost of living to consider in the US, which would be higher, since we’d probably have to get at least one car. We’d only be willing to move near my parents (who live in Florida), because:
- Childcare is too expensive in the US without grandparents.
- The point of moving would be to see them more often and more easily.
Things are, in general, more expensive in the US. I also foresee going out for dinner/drinks more if we moved to the US, because my brother is a bartender and trying to nail him down for a visit is like trying to part water, so it’s best to attack him when he can’t physically leave the building and suddenly find himself in Peru.
A Note On French Retirement Accounts (Or Lack Thereof)
There’s a French national retirement program that neither Seb nor I will probably see much of unless we work into our seventies. They calculate your retirement based on how long you’ve worked in France. I have only been working here for a total of seven years, and you need forty. I am currently 33, which means I’d have a very modest retirement pension at 66 years old, but only if I never left France and worked elsewhere.
Where Georgia and Seb Want To Be in 10 Years:
We’d like to be financially independent or close to it so that we can have more control over our time and less stress over our money. Ten(ish) years is a steep goal, but I think we can do it!
I guess we’d also need to be managing our investments, because I’m really not sure about the European stock market, and I’m not sure if I’m allowed to have investments in the US stock market if I’m living in Europe? As such, we’d probably invest in rental properties in France, which I’m pretty comfortable with as my mom managed hers (in the US) while I was growing up and I have her example to emulate, and I know exactly how much of a pain it can be.
The only thing is I have to get much more educated on is French taxation as far as investment properties are concerned, because I have more than a feeling that they tax heavily on non-primary residences.
We’d like to be living in France or somewhere else in Europe, but have plenty of time to visit the US and/or enough money to fly people over to visit us. Our daughter will be ten years old, and I’d like for her to see her grandparents often, attend a public school, spend a lot of time outdoors, and generally have a fabulous time. Obviously we would both like to spend lots of time with her too!
I’d also like to live in Italy at some point, because: the food! Also, I hear they pay university professors pretty well over there, unlike in France. So, yeah, in ten years it would be cool if all of this was happening. Trilingual babies unite!
Seb would like to basically keep doing what he’s doing (teaching), but not have to worry about money and contracts. I would like to be writing, gardening, volunteering, and doing some kind of interesting work. I’m very open to what that might be—anything from market gardening to teaching classes someplace to working at a museum. Basically I want my current life, but with more financial elbow room.
Georgia and Seb’s Finances
All amounts have been converted from Euros into US Dollars
|Seb’s income from teaching||$2,287||Includes French lessons for immigrant students, philosophy club, extra hours|
|Georgia’s income from teaching||$686||I work part-time|
|Georgia’s government aid||$629||Social assistance since I work part-time. However, I feel guilty about accepting this and might not apply for it next year.|
|Seb’s income from teaching adult education||$171||This is approximate and it changes every month|
|CAF (Caisse des Allocations Familiales)||$97||The government gives us money for childcare expenses, ain’t they sweet!|
|Monthly Net Income:||$3,870|
|Annual Net Income:||$46,440|
|Mortgage||$812||20-year fixed-rate loan at 1.65 percent interest. We are thinking about reducing the monthly payments and increasing the duration. What do you think?|
|Groceries||$503||We buy almost entirely organic (about 90%) and local (about 60%…but then there’s all that chocolate…). Organic and local are important to us! I cook everything more or less, outside of the occasional frozen pizza. Plus, since we shop for about half our groceries at the market, it’s less expensive than the grocery store. Win win!|
|Income Taxes||$265||I’d like to note here that I LOVE paying my taxes! It gives me the warm and fuzzies! I know what it’s like to not be able to afford health insurance and be in a seriously precarious financial position in the US, and if I can spare someone else that kind of day-to-day wrenching anxiety by sharing some of my surplus with a system that covers people’s basic needs (such as not dying or going into crazy debt for such exceptional and unheard-of circumstances as having a baby), I am incredibly happy to do so. I know tithing is big on this blog, and I like to think of taxation for social equality as a kind of non-religious tithing 🙂|
|Travel: Annual trip to USA||$194||YIKES. We try to avoid treating travel as a new fancy way to be consumers, but it still adds up! We visit the same places over and over in order to get to know them, stay with friends and try to live, once arrived, the same way we do at home. Except with a lot more pizza.
This trip to the US is one trip per year to visit my family. We spend about 500-700E each on airfare, then the rest is our spending budget when we arrive. We stay with family and borrow a car.
|Daycare||$170||The cost is $2/hour for twenty hours a week while I’m at work and studying. Papi (granddad) watches the baby two afternoons a week all by himself, something that all the older local ladies find VERY impressive. They were shocked when they discovered that he even changes diapers. Gender role switcheroo!|
|Utilities: Gas||$114||We have a gas stove and I cook a lot. LOVE THE GAS! Also used for radiators, heat, etc.|
|Dental Bills for Georgia||$114||TEETH! I blame this on being a pastry chef and chocolate cake addict, and on not having dental coverage when I was living in the US… I didn’t go to the dentist for a long, LONG time! This should go down/disappear next year when me teeths is fixed.|
|Health Insurance||$97||Optional, but we like to have the extra cushion. This covers all three of us.|
|Travel: Annual trips to Italy||$92||Two trips per year. Airfare and trains are about 70E for each of us, then we stay with friends who we try to treat as much as possible in return for their hospitality! Ain’t gonna lie, we also eat a lot of pizza and gelato and that delicious smoked-provolone-potato-tomato-pasta when we get there, to say nothing of the caffes with mineral water and little shell-shaped candied orange pastries…I die!|
|Georgia’s PhD Expenses||$69||Fees and books. Might go up considerably next year if the new regulations that require foreign students to pay a higher tuition go into effect. If this happens, it will be more like $600 per month.|
|Utilities: Electric||$57||We were thinking about getting solar panels and selling the excess energy to the electric company. Normandy is cloudy, but solar panels have gotten more efficient, and there’s some financial incentive from the government to invest in them… input?|
|Medical Expenses for Baby||$57||She had a lot of crazy medical visits in the first few months, though everything is fine now. She still goes to the chiropractor and the physical therapist once every two weeks. This should go down soon!|
|Seb’s Workday Lunches||$52||We’re going to try to cut this. Seb eats at school a few days a week and gets a sandwich one day a week.|
|Transportation||$46||Seb borrows a car once a week and puts in gas, and takes the train 1-2 times a week as one of his jobs is not in our town. We might be able to lower this. I walk or bike to work.|
|Boulangerie||$46||This has got to go down! It’s our Saturday pre-market treat to buy croissants to eat at the cafe with Seb’s dad. We could absolutely reduce this to one croissant each (heh) and eliminate the mid-week flan and pastry purchases. We also buy bread at the boulangerie, which is more sensible… and oh-so-tasty. Although I gotta admit, part of me has to acknowledge that I moved to France 99% for the pastries, so eliminating this altogether would not be in line with my lifelong goals…|
|Cafes||$46||Coffee is cheap! At $1.20 a cup, we have fallen into the habit of going out for one with friends more often than we probably should…|
|Travel: Annual trips to Paris||$46||We go to Paris about three times a year now that we have a baby (it used to be more). Tickets are 20E roundtrip, and we stay with friends. We do go out to eat a couple of times once there, at cheap but delicious places, and go out for drinks more often.|
|Internet and two cell phones||$34||Seb’s is $10/month, Georgia’s is $20/month. We broadcast our internet from my phone and I have international calling included.|
|Baby supplies||$34||Mostly diapers and cotton wipes. I only use water on her for now to protect her skin. We don’t buy her any clothes because everyone’s been generously giving her more clothes than she could ever wear.|
|Travel: Annual trip to Cannes||$34||One trip per year to visit family. Train tickets are about 100E each, the rest is spending. We stay with family and borrow a car.|
|Clothing||$29||This is one new pair of shoes each every two years or so, plus a few purchases per year. Could be reduced. I thrift shop, but am known to splurge on a really nice bathrobe or something equally extravagant every once in a while…|
|Postal expenses||$29||Mailing books for Seb’s publishing house, mailing postcards—a stamp is more expensive than a cup of coffee here!—postage for presents|
|House Insurance||$23||Should get a tiny bit cheaper this year as we’re switching providers.|
|Books||$23||We love us some books. I don’t have access to an English-language library, although I just recently got my mom’s US library info and have started checking out Kindle books on her account, so hopefully this will go down a little!|
|Gifts||$23||Seb and I rarely buy each other presents, but we do get things for family and friends.|
|Shrubbery Pruning||$17||We have ginormous privacy shrubs in the back, but now that I’m not pregnant I could easily take care of pruning these twice a year.|
|Water heater maintenance||$17||This might be an optional expense, but I’d rather pay for maintenance than for problems on something I can’t fix myself…|
|Household supplies||$17||Dish soap, trash bags, sponges, etc. This is all organic and eco-friendly to the max!|
|Household maintenance||$17||Paint, furniture polish, hardware, new handsaw, light bulbs, etc.|
|Personal care||$17||Essential oils, makeup, lotion, soap, shampoo, toothpaste, etc. I try to make stuff myself… organic deodorant and toothpaste cost a literal arm and leg!|
|Movies||$17||Seb goes to about two movies a month. He LOVES this, and I occasionally go with him, so long as it’s nothing too depressing 🙂|
|Drinks out||$17||Mostly in the summer, at our friend Herve’s bar.|
|Gardening||$17||This reflects a lot of start-up expenses for the new house’s new garden. Should be WAY less this year. I mostly grow veggies.|
|Paperwork stuff||$17||There is always some document to have translated or a passport to renew…|
|Bank Fees||$11||This is a mandatory checking account expense. They charge for the pleasure in France.|
|Medical Expenses for Seb||$11||He’s easy: occasional pharmacy expense, glasses.|
|Restaurants||$11||We almost never eat out but do so occasionally when friends visit from out of town.|
|Seb’s Haircuts||$5||I cut my own hair. Seb’s hair is hilariously difficult to cut, I tried and failed many times and have mad respect for his hairdresser, who’s known him since he was ten and lives in terror of his thrice yearly appointments.|
|Hobbies||$5||Calligraphy, painting, knitting, etc.|
|TOTAL MONTHLY EXPENSES:||$3,336|
|TOTAL ANNUAL EXPENSES:||$40,032|
|Savings Account||$33,167||Kind of an emergency fund / savings combined. The money is in two French accounts that accrue a tiny bit of interest and have a cap of 20,000 each. This cash is accessible at any time. We do not keep extra money in our checking account, other than what we think we’ll need for the month. There are no IRAs or company-matched retirement funding things here, since everyone has a retirement fund. There are also no credit cards, although I am considering applying for one next time we go to the States so that we can try a rewards program, although I’m not sure if the fees for using the card in another country would nullify any points/cash back etc. Any expats have some input? Also, funny story: when you want to buy stuff on credit here, say Christmas presents, you have to go get a proper loan from the bank. Hilarious, and does help, I think, to keep people out of superfluous debt!|
|Item||Owed on mortgage||Notes|
|Our home||$144,814||20-year fixed-rate loan at 1.65 percent interest.|
Georgia’s Questions For You:
1) Should I change jobs? Or single-mindedly focus on finishing my PhD and our future plans, even if this negatively impacts our savings rate?
2) Should we move to Florida to live near my parents? Is this a financially viable option?
3) Or should we stay put and figure out something else? What job could I do to make a higher wage, with a Master’s/PhD in English? I would prefer to avoid cooking because it doesn’t pay well. Same story with translation work (and those deadlines are crazy-making!)
4) How should we invest? Stocks? Real estate?
5) Should I get a side hustle to boost our income? Or is this a waste of time? We used to do AirBnb, but can’t now because our house is too small… which is too bad, because we loved having people over! I used to be a tour guide and had a great time, but we don’t live in a big city so it’s less viable now. Also, the pay was very irregular.
6) How can we save more money? I invite any and all suggestions for increased frugality! I know our budget has A LOT of fat, and I’d love to see concretely how that money could work towards furthering our financial goals.
Mrs. Frugalwoods’ Recommendations
Alright, now I want to go to France and eat all the things and drink all the wine!!!! Georgia and Seb’s life sounds amazing! The boulangerie line item alone has me drooling as I’m a world class pastry eater. They’ve managed to build a charming life that’s inventive, creative, and fulfilling. I’m delighted Georgia and Seb came to me for a Case Study because I think they provide a wonderful example of making it work under many different circumstances. I also want to congratulate Georgia for her diligence in putting her Case Study together. As she noted, it’s no small feat, but it is a tremendously useful exercise in illuminating your financial life.
The theme that echoed for me as I read Georgia’s Case Study is the need for discernment. I get the sense that she and Seb are interesting, brilliant, funny, kind people and that, because they’re smart and good at lots of things, they want to do all of the things! This isn’t bad, it just represents a challenge. Most of us are only good at one or two things, and only have one or two driving passions, but Georgia and Seb buck this trend. They are good at, and passionate about, a lot of things! That’s why I want to start off with an echo of Paula Pant’s advice:
You can afford anything, but you can’t afford everything.
This is apt for Georgia and Seb because there just isn’t a way–short of space/time tricks–for their lives to encompass everything. At least not all at once. And not without a lot more money.
The top line advice I want to offer Georgia and Seb is to spend time discussing and discerning what they want to do most. Georgia’s write-up for this Case Study should provide the foundation for this conversation and I encourage them to go through their potential life plans with a calculating eye.
I saw a number of competing goals in Georgia’s writing:
- Achieving financial independence in ten years
- Living in the United States
- Living in Italy
- Retiring early in France
- Earning more money
- The ability to travel more and be location independent
- To work as a university professor
- To be a published author
Most of this is achievable, but I’m hard pressed to figure out how it could all happen (at least, within the next ten years). So let’s dig into some specifics that will hopefully help provide a framework for Georgia and Seb as they go on this journey of discernment.
Georgia’s Questions #1 and #5: Should I Change Jobs? Should I Get A Side Hustle?
Georgia noted her desire to earn more money, but she also noted that she loves her current job–a rarity for most people, let me tell you! Of all the things I hear from readers, one of the rarest is what Georgia said:
I love my job… for me to give up the advantages of this job, I’d have to be paid a lot more. I walk to work (no car), work part-time, have zero work-related stress, have SIXTEEN WEEKS OF PAID VACATION to spend with my baby and my man, and to travel to the US… and I really enjoy my work!
I realize she doesn’t make much money, but it is lovely to hear from someone who enjoys her work so very much! Given that, I hope Georgia factors in her personal happiness in this decision-making process.
Georgia and Seb’s Financial Independence Goal
Georgia listed their top-line ten-year financial goal as achieving financial independence, and so I’ll address that within the context of her job-related questions. Financial independence is calculated based on two primary factors: your spending and your assets. The basic premise of financial independence is that you have enough in assets that a safe withdrawal rate will cover your expenses in perpetuity.
Based on Georgia and Seb’s current income, expenses, and savings, they are not on a track to reach financial independence or retire in the next ten years. However, that’s not to say they couldn’t radically increase their income and put themselves on this track, if that’s their primary goal. Earning a lot of money at a job you don’t love can be a means to achieving a very specific end (such as financial independence). Hence, we reach Georgia and Seb’s first juncture of discernment:
Would Georgia (and potentially Seb too) rather find a different job (with longer hours and more pay and potentially more stress/less enjoyment) in order to achieve financial independence? Or would she rather continue working a job that brings her daily fulfillment, but that isn’t going to allow her to reach financial independence anytime soon? There’s no right answer, there are just different scenarios to consider.
Achieving financial independence is a fairly uncommon thing and to do so requires an extraordinary set of circumstances–both a moderate/high income and low expenses. If Georgia and Seb determine that financial independence is more important to them than any of their other listed goals, they can do it, but it will entail:
- Dramatically increasing their incomes
- Reducing their spending
- Putting some of their other goals on hold, possibly permanently
Disclaimer side note: before making such a consequential decision as retiring early, anyone–including Georgia and Seb–should research from multiple sources, run their own numbers, and determine a rate of withdrawal that’s tenable for them. For more on the theories behind withdrawal rates, I recommend the following series from Early Retirement Now: The Ultimate Guide to Safe Withdrawal Rates. Additionally I want to note that in the US, most people have the backstop of social security, but Georgia and Seb don’t appear to have access to a similar system in France if they retire early. It’s unclear to me what their pension benefits would be (if anything) if they retired early, which could add another level of risk to this plan.
Higher Education Jobs In the US
I want to address Georgia’s interest in working as university professor in the US. I am not a professor, but I know a lot of them, and I’m pretty certain most of them would say that it’s no longer a profession that offers high pay, job security, or plentiful job opportunities. In the past, this wasn’t the case. But increasingly, US universities are moving toward fewer tenured faculty members and more adjuncts (which usually means no contract, no benefits, and lower pay).
According to this article in the New York Times, “Tenure-track positions are shrinking at colleges and universities. As a result, people with advanced degrees have found themselves in lower-paying adjunct positions indefinitely.” This appears to be an unfortunate nationwide trend in higher education and so I strongly urge Georgia to do more research into the viability of this career path. If Georgia’s #1 goal and desire in life is to be a university English professor, then she should do it, no matter the pay or the challenges. But I don’t get the sense that’s the case.
Further from the New York Times, “Over the past few decades, colleges and universities have responded to budget crises by hiring low-cost, part-time faculty to teach core curriculum courses that formerly went to full-time tenured professors.” Additionally, “Too many adjunct professors cannot make a living wage through teaching… In fact, one-quarter of part-time faculty are on public assistance.”
Unfortunately, and as an English major myself this PAINS me to the core, but The New York Times notes, “If you have a Ph.D. in accounting, you can basically get a job in two weeks… But in the liberal arts it’s an entirely different story… You can receive 100 or more applicants for a single position, and that causes a problem.” Sadly, this means Georgia’s outlook–with a PhD in English–is especially grim.
Again, there’s not a wrong answer here, but I don’t think–based on current trends in US higher education–that attempting to go the university faculty route will be lucrative or easy to accomplish. Additionally, Georgia noted that if they moved to the US, they’d only be willing to move near her parents in Florida, which I think totally makes sense from a family/grandkid perspective. However, most university professors need to move to wherever they’re offered a job–it’s rare that a professor is able to choose where they live. It would be a pretty small needle in a haystack for Georgia to find a full-time faculty position at a university near her parents. It could happen, but the odds are slim. I know there are a TON of Frugalwoods readers who work in higher education and I implore you to weigh in with your advice and experience!
Should Georgia Finish Her PhD?
If Georgia enjoys the program and has the time, then sure! The cost–at present–is quite low ($69 per month/$828 per year) and I don’t think presents a barrier. However, if her program increases to $600 per month ($7,200 per year) as Georgia noted it might, then I think she faces a tougher reckoning.
I’m not sure of the utility of the degree (see above discussion), but that’s not the only reason to pursue a PhD. If Georgia derives deep fulfillment from her program, then that’s a valuable reason to continue her studies.
If Georgia is set on working in a field that requires (or rewards) a PhD in English, then I encourage her to research those positions and their anticipated starting salaries.
Georgia’s Question #2: Should We Move To Florida?
My immediate reaction to this is no, because I can’t quite imagine going from bucolic French village (where one walks everywhere, unburdened by a car) to suburban Florida, where one must drive everywhere. This is more of a visceral reaction on my part than one founded on data points, but I do encourage Georgia and Seb to fully consider the ramifications of going from pastoral European village to suburban USA. Georgia notes that they visit her parents every year and so, next time they’re there, I suggest that she and Seb pretend they live there and see how it feels. Here are a few exercises that might help:
- Drive to the grocery store and peruse the options. Since food is important to Georgia and Seb, it’ll be important for them to know what they can expect.
- Drive to a potential daycare. Visit potential daycares and inquire about their prices and waiting lists.
- Drive to a potential workplace.
- Really, lots of driving.
- Look at real estate and get a sense for what their monthly rent/mortgage would be.
- Scope out cultural opportunities: bookstores, cafes, restaurants, farmer’s markets, etc. These seem to be important aspects of Georgia and Seb’s life in France and so they’d want to explore what options would be available in Florida.
The lifestyle shift would be momentous, but it’s also true you can’t put a price on living near family. But I always hesitate when people want to move somewhere solely to co-locate with their extended family. We analyzed this topic in depth in a previous Case Study (Reader Case Study: Should We Buy A Campground And Laundromat?) and here are some of the salient notes from that study, reframed for Georgia and Seb’s situation:
Something striking is that Georgia and Seb didn’t identify “living in Florida” as one of their longterm goals. In fact, Georgia specifically said, “Basically I want my current life, but with more financial elbow room.” The underlying message I got from Georgia is that they’re already living the life they want to live! They’ve carved out their little corner of the world and truly love how they spend each day. THAT, my friends, is the ultimate goal of using your money wisely. Having the ability to enjoy your life every day is WHY we save money, why we invest, and why we steward our resources carefully. It’s entirely possible their quality of life would increase if they lived closer to Georgia’s parents, but it’s also possible it wouldn’t. I can’t answer this for them, but I encourage them to ask each other the following questions:
- In five years, what will you regret more: not living near Georgia’s family or not living in the part of the world you love?
- Is it possible you’ll feel resentful towards family members if you give up so much in order to live near them?
- If you moved, would you feel as though you were just trying to work back to what you have now (a home in France)?
- Tellingly, Georgia noted that they’d like to return to France and so, again, I’m not sure that an interlude in Florida is going to make sense.
- Will you feel as though your daughter is missing out on the benefits of family if you don’t move?
Moving to Florida: From A Financial Perspective
Unless both Seb and Georgia are able to secure very well-paying jobs in Florida, I’m not sure the move would pan out financially. Georgia is aware of the expenses they’d incur in the states, including:
- Much, much, MUCH more expensive daycare (although it sounds like Georgia’s parents might be willing to provide some care). Full-time daycare for a baby can be anywhere from $1,000-$3,000 per month.
- A car, which includes: insurance, registration, maintence, repair, taxes, and gas.
- Higher health insurance costs.
- Higher living expenses (in terms of rent, utilities, groceries).
Additionally, from Georgia’s research into the rental market, it doesn’t sound like renting out their home would generate much (if any) revenue. Breaking even on a rental isn’t awful if their plan is to eventually move back to this house, but then again, I’d question the utility of moving away in the first place. Since they just purchased their home last year, it would be tough to break even (or come out ahead) if they sold it on such a short timeline.
I also want to make a note here for Georgia and Seb to do some research into their mortgage interest rate. A 1.65% interest rate is fantastic, but it almost sounds too fantastic to be a fixed-rate percentage. It very well may be, but it also might be an adjustable interest rate. It caught my eye because it’s so phenomenally low, so I just encourage Georgia to take a quick look at their mortgage paperwork to make 100% certain that it is a fixed rate.
Georgia didn’t specifically bring up the idea of location independence, but it seems that might be an ideal scenario for them (with the possible hitch of ironing out school for their daughter once she’s older). Here are gems that stood out as I read their Case Study:
- Georgia and Seb are worldly, cosmopolitan, bi-lingual, fascinating people. Given this, they want to experience the world fully.
- They want to live in Italy!
- They adore traveling and food! (I couldn’t agree more on both counts!!!!).
- They love their French village! There wasn’t a single negative comment about their current house or hometown.
- They already live close to one family member–Seb’s father–who is clearly a very involved granddad.
- They both have multiple interests, passions, and talents, which I think they could easily transmute into careers.
- They are hard workers. I think Georgia and Seb are romantic visionaries with an unusually strong work ethic. This is a great combination!
Given all of this, I wonder if they’ve considered both pursuing mobile careers, such that they’d be able to live in France for part of the year, visit Georgia’s parents for part of the year, and travel about for the rest of the year. They’ve already successfully run an AirBnB out of their home and so perhaps it would be viable to keep their home and AirBnb it while they traveled/visiting family. I don’t know if Georgia and Seb want to be this nomadic, but mobile careers would certainly grant them this freedom. They’d be able to:
- Spend quality blocks of time with both Seb’s dad and Georgia’s parents and brother WITHOUT the expenses and upheaval of moving to Florida permanently
- Retain their homebase in the French countryside (assuming they’re comfortable with renting it out/AirbnB-ing it when they’re not in town)
- Travel extensively for long periods of time each year
- Experience different cultures and foods together as a family
Remote work is increasingly common (my husband and I are both able to work from anywhere with an internet connection) and Georgia and Seb have such a panoply of skills that it seems they’d be able to find something satisfactory.
Georgia’s Question #6: How Can We Save More Money?
Oh I love it when people ask this (because I’m going to answer it whether you ask or not, so it’s always nice to be asked). What I want to highlight for Georgia and Seb, however, is that on balance, their issue is much more one of lower incomes. Georgia is keenly aware of this and, while it is possible for them to save more, I also want to make sure they keep an eye on increasing their income.
In every Case Study, I like to point out that what you choose to save or not save is a very personal decision. Cutting every last expense is NOT the right answer for everyone and I am NOT an advocate for making yourself miserable in the process of achieving financial stability. I AM an advocate for values-based, goal-oriented spending. I think it’s important to assess whether all of your expenses bring you fulfillment and a good return on your investment.
I think it’s also important to question if your rate of savings will help you to achieve your long-term goals. But what you spend on? That’s a very personal choice and one you have to make for yourself. My job is to identify areas where you might be able to save, but only you can decide what level of savings is right for you. If you’re struggling with where to save more and how to map out a longterm financial plan, I encourage you to take my free 31-day Uber Frugal Month Challenge.
|Item||Current Amount||Mrs. FW’s Notes||Proposed New Amount||Amount Saved|
|Mortgage||$812||This is fabulously low! Cheers!||$812||$0|
|Groceries||$503||This seems pretty reasonable for three people who mostly eat at home.||$503||$0|
|Travel||$366||I combined Georgia and Seb’s line items for their annual trips (to the USA, Italy, Paris, and Cannes). This is a tough one because it represents a significant amount of their spending, but it also represents a top priority for them.
This is an example of values-based spending, but it’s also $4,392 per year. It is, by far, their largest discretionary expense, but it’s also perhaps what’s most important to them.
My inclination in this category is to encourage Georgia and Seb to investigate cheaper ways to travel, which could include location independent jobs.
I’ve reduced this by deleting their trips to Italy ($92 per month) and Paris ($46 per month), but left in their trips to visit family in the US and in Cannes.
|Income Taxes||$265||Fixed expense; no change||$265||$0|
|Daycare||$170||Amazingly cheap!!!!! Nothing in the US comes even CLOSE to being this inexpensive.||$170||$0|
|Dental Bills for Georgia||$114||Georgia noted, “This should go down/disappear next year when me teeths is fixed.” Hooray! I’ll remove it for the purposes of this exercise.||$0||$114|
|Utilities: Gas||$114||$114 per month seems kind of high, but Georgia noted this is for their heat as well. Since they have a new(er)-ish house, it might be worth investigating options for insulation that might reduce this amount.||$114||$0|
|Health Insurance||$97||Fixed expense; no change||$97||$0|
|Georgia’s PhD Expenses||$69||Fixed expense; no change||$69||$0|
|Property Taxes||$69||Fixed expense; no change||$69||$0|
|Medical Expenses for Baby||$57||Georgia noted, “She had a lot of crazy medical visits in the first few months… This should go down soon!” So I’ll remove it.||$0||$57|
|Utilities: Electric||$57||Georgia asked about the viability of getting solar and this is something she and Seb should certainly research. It’ll depend on the incentives the government offers, the way in which their electric company structures metering, the amount of solar they’d be able to produce, the siting of their home, etc.||$57||$0|
|Seb’s Workday Lunches||$52||I’d recommend cutting this entirely–it’s a relatively easy and painless way to save!||$0||$52|
|House Taxes||$51||Fixed expense; no change||$51||$0|
|Boulangerie||$46||Oh the pastries!!! As a fellow pastry-lover, it’s tough to recommend removing this line item. What it really comes down to is the discernment issue: what do Georgia and Seb want most? I’ll remove it for now, just for the exercise of demonstrating how much they could save if they wanted to.||$0||$46|
|Cafes||$46||Same note as the pastries: What it really comes down to is the discernment issue: what do Georgia and Seb want most? I’ll remove it for now, just for the exercise of demonstrating how much they could save if they wanted to.||$0||$46|
|Transportation||$46||Georgia noted, “We might be able to lower this,” and so I’ll remove a tad from this line item and leave it to Georgia and Seb to figure out what’s feasible.||$30||$16|
|Baby supplies||$34||Seems reasonable to me!||$34||$0|
|Internet and two cell phones||$34||Nicely done! Supremely cheap.||$34||$0|
|Clothing||$29||This is certainly not an unreasonable amount, but it might be an area where there’s an opportunity to save more. I’ll remove it for now.||$0||$29|
|Postal expenses||$29||Fixed expense; no change||$29||$0|
|Books||$23||Same note as the pastries: What it really comes down to is the discernment issue: what do Georgia and Seb want most? I’ll remove it for now, just for the exercise of demonstrating how much they could save if they wanted to.||$0||$23|
|Gifts||$23||$276/year on gifts isn’t astronomical, but isn’t nothing either. Might there be room to DIY and decrease?||$15||$8|
|House Insurance||$23||Fixed expense; no change||$23||$0|
|Drinks out||$17||Same note as the pastries: What it really comes down to is the discernment issue: what do Georgia and Seb want most? I’ll remove it for now, just for the exercise of demonstrating how much they could save if they wanted to.||$0||$17|
|Gardening||$17||Georgia wrote, “This reflects a lot of start-up expenses for the new house’s new garden. Should be WAY less this year. I mostly grow veggies.” Given this note, I’ll decrease this amount here.||$5||$12|
|Household maintenance||$17||This is certainly not an unreasonable amount, but it might be an area where there’s an opportunity to save more. I’ve reduced it by a tad.||$10||$7|
|Household supplies||$17||This is certainly not an unreasonable amount, but it might be an area where there’s an opportunity to save more. I’ve reduced it by a tad.||$10||$7|
|Paperwork stuff||$17||Fixed expense; no change||$17||$0|
|Personal care||$17||This is certainly not an unreasonable amount, but it might be an area where there’s an opportunity to save more. I’ve reduced it by a tad.||$10||$7|
|Shrubbery Pruning||$17||Georgia wrote, “now that I’m not pregnant I could easily take care of pruning these twice a year.” Excellent! I’ll remove this amount.||$0||$17|
|Water heater maintenance||$17||Hmm, seems like a lot for just maintenance, but then again, I don’t know what type of water heater they have.||$17||$0|
|Bank Fees||$11||Fixed expense; no change||$11||$0|
|Medical Expenses for Seb||$11||Fixed expense; no change||$11||$0|
|Utilities: Water||$11||Fixed expense; no change||$11||$0|
|Seb’s Haircuts||$5||Fixed expense; no change||$5||$0|
|Current Monthly Subtotal:||$3,336||Proposed New Monthly Subtotal:||$2,715||$621|
|Current Annual Total:||$40,032||Proposed New Annual Total:||$32,580||$7,452|
Income vs. Expenses
While Georgia and Seb do have some room in their budget to save more, I think what this spreadsheet highlights is that the real issue impacting their ability to save is their income. At a certain point, there’s just nothing left to frugalize. In order to make momentous progress towards their financial independence goal, there’s no doubt that Georgia and Seb would need to dramatically increase their income.
Death By 1,000 Paper Cuts
Other than their travel line item, Georgia and Seb’s spending is a good illustration of death by 1,000 paper cuts. They aren’t wildly spending in any one area, they just have a lot of little expenses that add up each month and gobble the majority of their income. I counsel so many people who initially tell me “I don’t know where the money goes! We don’t buy expensive stuff!” This is a very, very, very common refrain. In fact, it’s VERBATIM what I said before I started tracking my own spending. I’m not telling Georgia anything new here; she shared the following observation:
After completing a detailed budget (thank you, Mrs. FW, for motivating me to do this!! Very, very eye-opening) I am sad to say that perhaps we are not quite as frugal as we thought… whoops!
People get tired of hearing me parrot “start with tracking your spending” because it sounds blah. Boring, rote. Boring as it may be, it provides one of the best (and easiest) ways to begin understanding your finances. Yes, income is important. Yes, investments are important. But none of it matters if you aren’t saving any of your money! You have to have something to invest. If you make $1M per year but spend $1M per year, you will (obviously) have a lower net worth than someone who makes $50K a year and saves half of it.
The VAST majority of folks I work with–here on the blog and in person–have a budget that resembles Georgia and Seb’s. There aren’t any massive line items, everything looks pretty reasonable, an yet, there’s no money left at the end of the month. If you’re not tracking your spending, I use and recommend the free expense tracker offered by Personal Capital. If you’d like to know more about how Personal Capital works, check out my full review.
Savings Accounts Side Note
One of the easiest ways to optimize your money is to keep it in a high-interest savings account. With these accounts, interest works in YOUR favor (as opposed to the interest rates on debt, which work against you). Having money in a no (or low) interest savings account is a waste of resources because your money is sitting there doing nothing. Don’t let your money be lazy! Make it work for you! And now, enjoy some explanatory math:
- Let’s say you have $5,000 in a savings account that earns 0% interest. In a year’s time, your $5,000 will still be… $5,000.
- Let’s say you instead put that $5,000 into an American Express Personal Savings account that–as of this writing–earns 1.70% in interest. In one year, your $5,000 will have increased to $5,085.67. That means you earned $85.67 just by having your money in a high-interest account.
And you didn’t have to do anything! I’m a big fan of earning money while doing nothing. I mean, is anybody not a fan of that? Apparently so, because anyone who uses a low (or no) interest savings account is NOT making money while doing nothing. Don’t be that person. Be the person who earns money while sleeping. Rack up the interest and prosper. More about high-interest savings accounts, as well as the ones I recommend, here: The Best High Interest Rate Online Savings Accounts.
Overall Asset Allocation
Now that we’ve discussed some of the ways in which Georgia and Seb could save more money every month, let’s take a look at their overall financial picture.
- No debt other than their mortgage! Hooray and congrats! I am so impressed and delighted that they buckled down and paid off all of their debt. Further, they’ve managed to stay out of debt. Perfect job here.
- Robust emergency fund! Fabulous and wonderful!
- An emergency fund is typically three to six months’ worth of your expenses held in an easily accessible checking or savings account. At their current rate of spending ($3,336/month), that would be $10,008 to $20,016.
- Since they have $33,167 in savings, they’re in great shape.
- An emergency fund serves as your buffer against financial catastrophe and is a mandatory part of everyone’s finances. Yes, everyone!
- No retirement savings. Eek! This makes me nervous. I’m very much hoping that French readers will chime in and offer their advice on both this and the below line item (investments). I am not at all familiar with the French banking system, but I encourage Georgia and Seb to do research into retirement savings vehicles.
- My concern for them is that they won’t accrue enough working years in France or the US (or any other country) to qualify for government supplied retirement (social security in the US).
- Hence, I suggest Georgia and Seb research if there are ANY tax-advantaged retirement savings vehicles they can avail themselves of in France.
No investments aside from their primary residence and their savings account. Similar to the above, we’re straying into territory I’m not versed in and can’t offer concrete advice on. Georgia is aware it’s important to have investment elements of her financial portfolio and she’s correct that two very common avenues for this (both of which I happen to do) are rental properties and the stock market.
- As far as I understand, it is indeed possible for Georgia to invest in the US stock market (through a low-fee index fund). As an American citizen, I am pretty sure Georgia can hold an American brokerage account (through, for example, Fidelity or Vanguard).
- However, the huge caution with this approach is that an American brokerage account would be denominated in dollars while Georgia and Seb are living in a country with a different currency. In light of this, if she did choose to open an American brokerage account, she’d need to be very careful about currency exchange rates. Basically the concern is that if the dollar loses value against the Euro, suddenly your savings are worth less (and of course the inverse is also true). Over time, currency exchange rate fluctuations could dramatically impact your net worth. In sum: a savings account denominated in a currency over than your own can be risky and challenging, although not impossible.
- What I encourage here is for Georgia and Seb to do more research into ex-pat investment options from other Americans living in France. I just don’t know enough about this to offer detailed advice.
- What about rental properties?
- Georgia also asked my opinion on buying rental properties in France and my answer is that this might be a good idea and it might not be. Several things in Georgia’s favor:
- She said she loves tracking the real estate market.
- Her mom owns investment properties and so she has a first-hand source of information.
- She and Seb have dipped their toes into this arena by renting out their place on AirBnB.
- There are many factors that go into determining whether or not rental properties are a good idea, and it’s certainly something Georgia and Seb should investigate. Owning a rental property is so heavily location-dependent that I really can’t advise on whether or not this is a good idea. Georgia and Seb should research:
- Purchase prices and rental prices in the area (and the return therein)
- The percentage of units that are rented in the area
- If there are home owners’ associations and what the rules are governing rental units
- What sort of mortgage interest rate they can anticipate when buying an investment property
- Taxes and laws surrounding rental properties
- The rental prices in the area and whether or not these typically include things like utilities, snow removal, trash, etc.
- Whether or not they’d hire a property manager and how much this would cost. If they don’t plan to hire a property manager, they should assess their DIY skills–can they re-plumb a toilet? Fix a leaky sink? etc etc etc (as Georgia and Seb know, repairs are endless in homes… )
- Calculations for a robust fund to cover vacancy, maintenance, repairs, etc
- The caliber of tenants in the area and how likely evictions or vacancies are
- Landlord/tenant laws in France and in their region
- Georgia also asked my opinion on buying rental properties in France and my answer is that this might be a good idea and it might not be. Several things in Georgia’s favor:
Georgia and Seb are in a good position–both financially and in terms of life enjoyment–and so I think this is an exciting juncture for them. They have the opportunity to consider what they truly want to do in life and map out a plan. The key for them will be whittling down their many ideas and passions to a simplified core that represents their highest priorities.
Here’s my summary of advice to Georgia and Seb:
- Spend time on the topic of discernment. Quiz each other on what you want most from life and make lists of everything you’d love to do. Narrow it down, be honest about what’s reasonable and what you can afford. Identify your top line priorities and then let go of everything that doesn’t align with those goals.
- Consider the ramifications (and realities) of moving to Florida. Consider the change in lifestyle, the change in expenses, and whether or not you’d enjoy living there.
- Research the job prospects and salaries for Georgia as a university professor in the US.
- Consider if location independent careers would more nearly meet your goals of: traveling, seeing family more often, earning more money.
- Review the above suggested decreases in spending to determine what would be tenable.
- Determine if financial independence in ten years is your top priority. If so, turn your focus to finding higher paying jobs.
- Research investment options. Research the availability of tax-advantaged retirement accounts in France. Research investment options for ex-pats living in France. Research the viability of purchasing rental properties. As part of this research, double check the fine print details regarding your mortgage interest rate.
Ok Frugalwoods nation, what advice would you give to Georgia? She and I will both reply to comments, so please feel free to ask any clarifying questions!
Would you like your own case study to appear here on Frugalwoods? Email me (firstname.lastname@example.org) your brief story and we’ll talk.
Updated 3/12/19: After many of you commented on how delightful Georgia’s writing is, I begged her to divulge the following:
“After many years of being harassed by her mother to sit down and write it, Georgia has written a memoir about living and cooking in France (from Normandy to Paris to the French Riviera) and will soon be shopping it around the literary scene.”
Hopefully we can all read it soon!
Update from Georgia on 12/10/19:
I wanted to let you know that I launched a blog about cooking and living in France. It’s at: https://georgiaerwin.com/
I decided (in part inspired by the Uber Frugal Month challenge) to do a year-long set of monthly cooking challenges—such as a month of wine and cheese pairings (tough one), one about nut-based recipes, another focusing on traditional French cuisine, etc…and even an Uber-frugal-style month!
In other news, I’ve recently gotten a R&R (revise and resend) on my memoir about living and cooking in France. It’s from one of my top-choice agents so I’m really excited to get it polished up and sent back to her. I’m feeling pretty good about it this time around…
In other other news, I will soon be teaming up with one of France’s top coffee roasters to write a guide to coffee and coffee houses in France, which we plan to pitch to various French publishing houses and to the Michelin guide (since there are no Michelin-style guides for cafés…yet!). This project is still in the early days, but I’m foreseeing several surrounding writing/cooking/publishing projects… we also have another upcoming co-project that involves coffee roasting and cooking ateliers in a shared space here in our village. Very excited about all of this! Anyhow, thank you for reading this. Your Reader Case Study really helped clarify things for me, and you can see the results above!